Dubai Market Updates

Dubai: Dubai’s benchmark index — DFM — has been the worst performer globally in June, followed by Abu Dhabi’s ADX, Gulf News has learnt. Both the indices have suffered double digit fall. DFM witnessed 22.50 per cent fall, followed by ADX with 13.37 per cent and Ireland’s ISEQ with 4.06 per cent. Dubai bourse has been taking a beating for the past three months, led by real estate, financial and investment shares. “A restructuring at Arabtec has induced pressure on all other shares. Arabtec is mostly dragging other shares down. What we are seeing is a correction after a strong appreciation. It is long overdue as the shares have reached exaggerated levels,” said Rami Sidani, head of investments at Schroders Mena. Shareholders lost confidence in the property developer after its CEO Hasan Ismaik resigned and a limited staff layoff. Arabtec’s shares have fallen 61 per cent from a record close on May 14 by 11.65 per cent. The shares have more than tripled in price this year but for the past couple of trading sessions, the shares have hit the 10 per cent daily cut-off limits many times. Sidani said that Arabtec has been the darling of the retail investors at the beginning of the year, fuelled by inaccurate statements by the former CEO and accordingly, retail investors have been involved heavily in the stock. In the last three months, Arabtec has roughly accounted for “half of the average” daily volume. Panic selling “What we are seeing now is a reversal of the trend and a panic selling, in addition to triggering margin calls,” he said. In 2013, DFM was the second-best performer with 107.69 per cent after Venezuela’s benchmark IBC Index, which appreciated a whopping 480.47 per cent while Abu Dhabi’s ADX index rose by 63.08 per cent. So ...

Nakheel has set out its stall to potential financial backers after pledging to repay all of its bank debt by August – four years earlier than it originally planned. The palm islands developer, which was a central part of the Dubai World conglomerate that spooked financial markets in 2009 after it asked creditors for a repayment standstill, had amassed total debts of Dh7.9 billion when it was taken over by the Dubai Government in 2011. Under the terms of a debt restructuring package agreed at the time, Nakheel planned to pay back its bankers in stages beginning next year and in 2016 and 2018. The company also agreed to issue to trade creditors a sukuk that falls due in August 2016. But with Dubai’s property market reviving, Nakheel said yesterday that it would pay off Dh5.54bn in August, clearing its bank debts completely after having paid off Dh2.35bn in January. Joking that the company ought to have invited its bankers to the press conference at the lavish Rixos hotel on The Palm Jumeirah, the chairman Ali Rashid Lootah described the announcement as probably “the most exciting milestone in the history of Nakheel”. “This means that we have more options to raise future finance for our projects. Under the restructuring, banks were restrained from dealing with us. All of our projects were affected. You don’t know what we had to go through to launch new projects. There were a lot of restraints about the size of the project and the nature of the projects. But now hopefully we might be looking for some more finance,” he said. “There will be more and bigger projects,” Mr Lootah said, without giving any details of specific future plans. Nakheel said that all of the cash had come from its own resources, rather than from ...

DUBAI: “Keep calm. There’s no bubble,” proclaimed a giant poster on a 40-story building overlooking a Dubai highway, advertising a property finding portal late last year. That may have been true at the time, but the risks are rising, Can we say Dubai property bubble coming back? A leap in bank lending to the construction industry indicates financial institutions have resumed pouring money into real estate projects in the last few months, after cutting back sharply in the wake of Dubai’s 2008 crash. At the same time, property prices have been soaring on the back of Dubai’s economic boom, increasing the chance of the market rising to unsustainable levels. Surging supply and unsustainable demand are a risky mix the same combination that got Dubai into trouble six years ago, forcing state firms to reschedule tens of billions of dollars of debt and jolting financial markets around the world. This time, authorities say they are aware of the dangers, and they have taken regulatory steps to slow demand growth. But the steps are still modest compared with those by other global cities facing the same problem, such as Hong Kong and Singapore. “It’s too early to be calling top, but credit growth of that pace tells you that the cycle is accelerating rapidly,” said Simon Williams, HSBC’s chief economist for the region. “Such a huge increase in lending is simply not consistent with economic order and stable asset prices. The time for policy action is now, before bubbles really get going, not when they are already in place.” Dubai house prices posted the fastest year-on-year rise of any of the world’s major markets in January-March for the fourth straight quarter, soaring 27.7%, consultants Knight Frank said. Rents rose about 30% on average in the same period. The value of real estate ...

The Dubai Stock market has been taking a beating for weeks, and news of firings at Arabtec (ARTC:UH), the United Arab Emirates’ largest listed builder, caused a new round of panic yesterday. Shares in the stock exchange fell 6.7 percent, to 4,009.01, leaving them down 25 percent from their May peak. It was the end of a long bull market: Since June 2012, shares in the emirate had climbed 250 percent. Dubai has been looking like a property bubble for a little while now. The emirate has led consulting firm Knight Frank’s Global House Price Index for 12 months, and while growth has slowed in the past quarter, it still was up 27.7 percent for the year ended in March. Reuters reported that real estate deals in Dubai “jumped 38 percent in the first quarter to some 61 billion dirhams ($16.6 billion).” If the symbol of the last boom, which ended brutally in 2008, was a network of islands built out of dredged sand in the shape of a world map—still unoccupied—the symbol of this one is a plan, announced in 2012, to build a complex that includes the world’s largest mall, along with 100 hotels (especially since a different mall in Dubai already holds the title of world’s biggest). Source: Business week